Project name
Integra 289 Exchange (FULLY FUNDED)
Location
Integra 289 Exchange, Orlando, Florida, USA
Initiator from Integra 289 Exchange CLP
REALIANCE USA B.V.
Local partner
Integra Land Company (ILC)
Property Manager
Constructor
LandSouth Construction (expected)
Category
Development rental apartments
Expected investment term
3 years
Exit strategy
Sell to investor
Participation
Preferably from US$ 75,000 excl. 3% emission costs (169 participations of US$ 25,000)
Structure
Participation in Integra 289 Exchange Capital LP
HUD-loan
US$ 38,100,000
Equity in Capital LP
US$ 4,225,000
Equity in Project LP
– REALIANCE/ investors US$ 3,986,694
– Highpoint Residential US$ 3,986,694
– Integra Land Company US$ 419,652
Expected distribution after rent stabilization in year 3
12% – 15% per year
Projected gross capital growth after sale
60.6% after 3 years
Projected gross return (ROI) after sale
20.2% per year after 3 years
Unique selling points
Because of solid business climate and job growth, Orlando is one of the fastest growing cities in the southeast of the US.
The absence of ‘state tax’ gives this city a favorable business climate.
The strong demographic and employment growth feed the rental apartment market in Orlando, which will result in a rent increase of over 6% this year.
The future project will have a good visibility on a site along Highway 17 (nearby Interstate 4) and is located next to a lightrail station (at walking distance) as well as a large nature park.
The site has a favorable location in relation to employment centers, especially on the north side of Lake Mary (Colonial Townpark incl. mall, Colonial Center Heathrow and Primera Office Park) but also with regard to Seminole Town Center and Downtown Lake Mary with many shops and restaurants.
The local partner, has a lot of experience as a developer of similar projects, with Orlando as as its home and most important market.
The approval of the site plan, the most important permit for current proposition, has already been obtained. The construction of the project is expected to be executed based on a GMAX-contract by contractor LandSouth, with which ILC has already collaborated on multiple projects.
The projected rental income is based on the current rents of comparables in the sub-market, resulting in an expected ‘cash-on-cash’ return of 12% – 15% per year (possible after rent stabilization in year 3).
In addition to the commitment of half of the equity by an American partner, ILC and REALIANCE also contribute a substantial part of the required equity.
HUD-loan
For the financing of the project, a HUD-loan with favorable financing conditions is used, including a relatively low fixed interest of 4,5% per year (estimated) and a long term of 40 years, so no refinancing risk is applicable during the term of the project if this is longer.
HUD-program characteristics
The program of the US Department of Housing and Urban Development (HUD) is available for developers who wish to develop market-rate projects in suburban areas, specifically in the growth path of the city.
In the same sub-market, no other project that is not fully leased can be financed.
Projected rents are based on actually realized rents of comparable projects.
All relevant analyses of both the rental income and the development costs will be checked by an independent adviser approved by HUD.
The loan may be assumed by a potential buyer.
For more information you can reach REALIANCE at +31 (0) 20 21 03 180 or invest@realiance.nl
